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Arkansas Blue Cross Blue Shield

Founded in 1948, Arkansas Blue Cross and Blue Shield, an Independent Licensee of the Blue Cross and Blue Shield Association, is the largest health insurer in Arkansas. Arkansas Blue Cross and its family of affiliated companies have approximately 2,870 employees and provide low cost medical and dental insurance.

Not-For-Profit Organization

Arkansas Blue Cross differs from commercial insurers in several ways. Arkansas Blue Cross is a not-for-profit mutual insurance company. That means that nearly all the money we collect as premium is paid out in benefits for customers — on the average, nearly 85 cents of every dollar. The remainder — about 15 cents of every dollar — is used for operating expenses and reserve funds, which we are required by law to maintain.

As a not-for-profit, mutual insurance company, Arkansas Blue Cross is owned by its policyholders, not by stockholders. This means that premium dollars are used solely to pay claims and administrative costs, not to pay stock dividends. Any excess funds are held in reserve for payment of future claims. Arkansas Blue Cross must maintain a fiscal balance between premium income and benefits paid to ensure that we have the ability to continue to offer these products and to pay policyholder claims in the future.

Locations

The main office of Arkansas Blue Cross is located at 601 S. Gaines Street in downtown Little Rock.

Arkansas Blue Cross and Blue Shield is a member of the Blue Cross and Blue Shield Association. This means Arkansas Blue Cross has licenses from the Blue Cross and Blue Shield Association to offer health insurance benefits and related services under the Blue Cross and Blue Shield names and service marks in the state of Arkansas.

As a Blue Cross and Blue Shield Association member Plan, Arkansas Blue Cross is managed and controlled by its own community-based Board of Directors, which must contain a majority of “public members.” Public members are people from the community who are not employed in the health-care industry. Consequently, the Blue Cross and Blue Shield Plans have a strong commitment to their local communities and customers that is not necessarily shared by commercial insurance companies.

Neither the Blue Cross and Blue Shield Association nor the other member Plans of the Blue Cross and Blue Shield Association act as guarantors of the financial obligations of Arkansas Blue Cross and Blue Shield. However, Arkansas Blue Cross and Blue Shield and the other member Plans in the Blue Cross and Blue Shield Association are subject to uniform financial standards, established by the Blue Cross and Blue Shield Association, that are intended to foster a system in which each member Plan maintains adequate financial resources to meet its obligations to its customers.

National Institute for Health Care Management (NIHCM) Affiliation

In 1993, Arkansas Blue Cross joined with 11 of the nation’s leading health care companies to form the NIHCM. The NIHCM is a non-profit organization based in Washington, D.C., that was established to: 1) sponsor high-quality, non-partisan research of health care issues; 2) act as a clearinghouse for research on health care management and state managed care data; and 3) promote innovation to continuously improve the health care system.

History of Arkansas Blue Cross

After World War II, Arkansas’ health-care system found itself at a turning point. In April 1946, two major organizations (the Arkansas Medical Society and the Arkansas Hospital Association) almost simultaneously began looking into the possibility of starting a statewide hospital and medical insurance program—an idea that was rapidly taking root in other parts of the nation.

The two groups quickly discovered they were investigating the same concept, so they decided to join forces. In June 1946, a joint committee took a fact-finding trip to Chicago and met with officials with the national Blue Cross Commission and other health-care leaders.

After much deliberation about whether the program should be commercial or nonprofit in nature, the group finally decided to solicit proposals from the 114 carriers licensed to write hospital and surgical coverage in Arkansas. Only six responded, but they all felt the proposed coverage was far too liberal. The group asked for suggestions from the bidders. None were accepted.

The group eventually settled on a program offered by the John Marshall Co. (a new firm formed by individuals from other Blue Cross plans). The company was long on experience but short on capital, and by 1948, the company was forced to close its doors.

Because of their commitment to Arkansans who enrolled in the John Marshall plan, the two groups decided to combine their resources and secure some additional funding to found a new, nonprofit venture that would adhere to the principles of the Blue Cross and Blue Shield Commission.

The physicians’ group provided a loan of $10,000, the hospital organization contributed a $14,425 bed-assessment loan, and the Arkansas Farm Bureau Federation added a $5,000 loan. And on Dec. 3, 1948, Arkansas Insurance Commissioner Jack G. McKenzie approved the articles of incorporation of Arkansas Medical and Hospital Service, Inc., which eventually became Arkansas Blue Cross and Blue Shield.

The joint committee hired Jack L. Redheffer of Kansas City as the organization’s first executive director, and the fledgling insurer set up shop in Room 815 of the Rector Building at Third and Spring streets with just five employees and a lot of enthusiasm.